ArcelorMittal signs investment agreement with the Italian government

At the end of December 10, ArcelorMittal announced that it had signed a legally binding agreement with Invitalia, the Italian investment promotion and enterprise development agency, to create a public-private partnership for Ilva's former steel mills.

The investment agreement will lead to the recapitalization of AM InvestCo, a subsidiary of ArcelorMittal, which signed a lease and commitment to buy out Ilva's business back in 2018.

Invitalia will invest in AM InvestCo in two tranches: the first investment of € 400 million will be made by 31 January 2021 (subject to EU antitrust law approval), which will give Invitalia joint control over AM InvestCo. The second tranche of up to 680 million euros is payable upon completion of AM InvestCo's purchase of Ilva's business by May 2022, after which Invitalia's share in AM InvestCo will reach 60%.

According to the company's press release, ArcelorMittal will also invest up to 70 million euros in the amount necessary to retain 40% of the shares and joint control over the company.

AM InvestCo and Invitalia have agreed to invest in CO2-reduced steelmaking technologies, including the construction of an arc furnace with an annual capacity of 2.5 million tonnes. An industrial plan, similar to the plan planned for March, envisages reaching 8 Mtpa of production by 2025.

According to a press release, AM InvestCo's management will be based on the principle of joint control, starting with the first investment by Invitalia. Sources close to the deal told Platts that the management of the new company will consist of six members, three from each partner, with a chairman chosen by the Italian government and CEO of ArcelorMittal. The current CEO, Lucia Morselli is expected to remain in office.

It is clear that this is the first time that the state will have a stake in the ArcelorMittal holding, at least in Europe.

AM Italia's current steelmaking facility will close this year with an output of around 3.3 to 3.2 million tonnes of crude steel, union sources said. As the market for sheet steel has improved since the end of October, AM Italia plans to launch a third blast furnace in January with a design capacity of around 2 million tonnes /year. The newly launched BF2 furnace will partially compensate for the weekly maintenance gap on the BF4 at the end of this year.

AM Italia has around 10,700 employees, which is the main reason the Italian government wants to keep the company running. ArcelorMittal agreed to buy Ilva in 2018 under a lease and purchase agreement for 1.8 billion euros and invest an additional 2.4 billion euros in cleaning and modernizing the plant, which is facing environmental challenges.

After legal problems with the Italian state in early March, ArcelorMittal reached an agreement